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Brexit-fueled nationalism will make us all poorer

Brexit-fueled nationalism will make us all poorer

Speech by Brian Hayes MEP at the Annual Conference of the British-Irish Chamber of Commerce – Clayton Hotel, Dublin Thursday 16th March 2017

Economic nationalism follows political nationalism – it’s as sure as night follows day. We have seen it in our common European history. We have seen it on these islands. And the great success of the EU has been to keep a lid on the ever present nationalism that has caused such chaos in the first half of the last century.

British Chamber Commerce

The drumbeat of nationalism is once again being heard across the continent. The Brexit referendum was in many respects a manifestation of English nationalism. There is a now a real possibility that the outworking of the Brexit referendum may result in the breakup of the United Kingdom. Scottish and English nationalism are now feeding off each other in a negative feedback loop.

The dangers of an awoken nationalism on these islands – be it English, Scottish or Irish nationalism – make the task of business stability and business confidence more difficult. Trade does not grow when countries are putting up barriers. In fact since 2008 the rate of world trade has grown by half its rate in the previous decade. As countries retreat from each other, we are all poorer.

Nationalism, English nationalism specifically, is the reason and the byproduct of Brexit. I said the day after Brexit that the breakup of Britain could happen in a decade as a consequence of this historic decision. The very existence of the UK is challenged because a majority of people in both Northern Ireland and Scotland find that English voters are dragging them out of the EU against their will.

I raise these issues because politics matters to the business environment. We take for granted at our peril the political stability that has been won here in Ireland or across the continent.

New fears are often old fears. And in my view fear – either real or perceived – is permeating the political environment right now on these islands. It is making politics very difficult right now and even undermines the very agreements that we all thought were water tight and irrevocable.

– Different parts of the UK are fearful about their future and their place in Europe.

– We here in the Republic are fearful about how Brexit will affect us. It seems that the consequences to this country were both ignored and dismissed when the UK made its decision.

– The British government, despite what they say, I would imagine are fearful as their stated strategy or single speech in response to Brexit is both contradictory and as yet, impossible to achieve.

– Other member states of the EU are also fearful, having weathered the worst of the financial crises, and at a time of emerging growth across the Eurozone, they now ask how Brexit will affect the EUs long anticipated recovery.

– And we are all fearful of what will follow the new Trump presidency in the United States as he has made it absolutely clear that his administration will be pursuing a nationalist, America First, economic agenda.

Brexit has unleashed political uncertainty and business have to weight up very carefully, how this new mood is going effect trade on these islands and across the EU.

It is in the DNA of Irish nationalism to see Britain’s difficulties as Ireland’s opportunities. There are some who cannot avoid the temptation for a little Brit bashing. We have seen political posturing and showboating from some on the issue of a border poll on Irish unity. Far from advancing the cause of Irish unity, such calls will only deepen divisions within Northern Ireland and make real reconciliation impossible.

In the years ahead Irish based businesses trading with the UK and with the EU will have to assess political developments within the UK. They will also have to make a judgement call on the progress of Brexit negotiations, while at the same time being fully aware of political developments within the EU. The upcoming elections in France and Germany also have the potential to deliver greater uncertainty; hopefully they will bring increased stability.

Amidst all this uncertainty, it’s the task of mainstream politicians and mainstream parties to calm things down.

We need to say a number of things and in so doing try to bring some order to these events. I see 6 fundamental principles that we need to accept going into these talks. Accepted on both sides.

  1. Brexit is going to happen and it’s all our responsibilities to make sure, in so far as possible, that the harmful effects are minimised as we work through the process
  1. None of us – neither the British nor the EU – can for one second countenance the possibility that these talks be allowed to fail. The worst outcome for Britain, Ireland and the rest of the EU is some cliff edge – we cannot allow that to happen.
  1. Ireland will remain in the EU and will over time become a core country in the Eurozone system. Our negotiation in the upcoming talks will be part of the EU 27 and we expect that our issues will become the responsibility of the EU negotiation team to deliver upon.
  1. These negotiations are not a sprint but a marathon and could well take between 6-10 years in duration. We need to be prepared for that time span.
  1. This process will outlive this and the next Dail and is something we will have to live with for a long time. It’s important from Ireland’s perspective that we have absolute continuity of policy from opposition to government. And there is a special responsibility on the government to include and involve the principal opposition parties. Irish politics is not good at this and has to change quickly so that a bi partisan approach is achieved no matter who is in government.
  1. The UK must never be regarded as some third country in its new relationship with the EU. It’s not like Brazil or Mexico, its importance to the financing and the economy of Europe must be recognised. We have to find a solution that works for the EU and the UK.

From Europe’s perspective I believe that the atmosphere can be improved for these talks if the EU makes it clear from the start about a number of things.

Firstly I believe that a transition phase has to happen. The British know it, the EU knows it. It is simply unimaginable that at the end of the divorce proceedings, which will hopefully be within 2 years, that there would be no transitional agreement for say at least 3 years. This more than anything else would give some certainly to business on these islands. If we were able to say that for the next 5 years, there would effectively be no change in either tariffs or indeed on regulations, it would help business to plan for the future. The EU should concede on this point early. Equally it would be important that a full discussion on the shape of the final agreement with the UK should happen during the transitional phase of the negotiation.

Secondly I believe it’s crucial that the EU make it clear – especially from Ireland’s perspective – that the divorce settlement, effectively the end of Article 50, can only come about by way of unanimity. The current procedure allows the EU Council in deciding on the agreement to decide by way of a strong qualified majority vote. The Council should make it clear from the start that ALL 27 member states have rights in this process and that ultimately all concerns have to be met. This from Ireland’s perspective is crucial in establishing that we cannot be rail road member states into accepting something that is not in our national interest.

And finally, it would help matters greatly if the EU and the UK do not get caught on an endless debate at the start of Ibsen process on outstanding budgetary commitments. Yes a liability exists and the UK must meet its obligations, but we cannot let the budget issues scupper the talks from the start.

But the UK also needs to heed serious advice – If they try to play chicken with the EU in these negotiations they will end up as roadkill. Greece tried to do this during their bailout talks and they learned their lesson the hard way. While the UK does have some cards to play, the EU clearly holds the upper hand in these talks. It is the EU that holds the keys to a transitional deal, single market access, customs union, equivalence and any sort of bespoke deal that the UK wants. If the UK wants to play brinkmanship, they will be facing a very stern opponent.

 

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